Option Selling during quarterly results
- Thread starter sanju005ind
- Start date
Yes earlier I used to do that taking .15 or .20 Delta on both sides on the monthly options. If there is a rapid movement one can keep adjusting the positive side to match the delta of the losing side.
Another way to play the monthly options on a weekly basis is do the strangle on the .15/.20 delta on week1, and then next week. do the same again on the monthly with the new .15/.20 delta. This way you are playing weekly but on the monthly options. Kind of Strangle laddering. You keep moving as market moves. This way direction becomes irrelevant. Let me put some trades. If not real ones atleast the simulated ones.to demonstrate it.
Another way to play the monthly options on a weekly basis is do the strangle on the .15/.20 delta on week1, and then next week. do the same again on the monthly with the new .15/.20 delta. This way you are playing weekly but on the monthly options. Kind of Strangle laddering. You keep moving as market moves. This way direction becomes irrelevant. Let me put some trades. If not real ones atleast the simulated ones.to demonstrate it.
@siddhant4u I am creating a position(Real Account) in Nov Series with delta ~15 on both sides. Time is also nice since IV has been rising.
We will Adjust at the max one and rarely twice if any side of the leg is being tested. We Will Start Exiting the position Once we get 50%-80% of the premium received. Next week if the market stays around the same levels we will not create position. If the market moves we will create fresh position with Delta 15 and so on for the week after. We will track them EOD/EOW. what you say.
We will Adjust at the max one and rarely twice if any side of the leg is being tested. We Will Start Exiting the position Once we get 50%-80% of the premium received. Next week if the market stays around the same levels we will not create position. If the market moves we will create fresh position with Delta 15 and so on for the week after. We will track them EOD/EOW. what you say.
In general- option writing for time decay is highly lucrative window shopping deal.. 
Anyway the big issue is at 2 levels -
1. Many people who do back testing on option writing just do it on expiry prices. So they never knew draw downs on gap ups and gap downs
2. Adding to point 1 - they don't know snapshot max drawdowns occurred on minute to minute basis during volatile moves.
I can say with confidence that most of the back testing's does not cover point 2. So the key is remains that - if the system, traders psyche, traders risk tolerance and appetite levels can hold the drawdown's.
Anyway the big issue is at 2 levels -
1. Many people who do back testing on option writing just do it on expiry prices. So they never knew draw downs on gap ups and gap downs
2. Adding to point 1 - they don't know snapshot max drawdowns occurred on minute to minute basis during volatile moves.
I can say with confidence that most of the back testing's does not cover point 2. So the key is remains that - if the system, traders psyche, traders risk tolerance and appetite levels can hold the drawdown's.
In general- option writing for time decay is highly lucrative window shopping deal..
Anyway the big issue is at 2 levels -
1. Many people who do back testing on option writing just do it on expiry prices. So they never knew draw downs on gap ups and gap downs
2. Adding to point 1 - they don't know snapshot max drawdowns occurred on minute to minute basis during volatile moves.
I can say with confidence that most of the back testing's does not cover point 2. So the key is remains that - if the system, traders psyche, traders risk tolerance and appetite levels can hold the drawdown's.
Anyway the big issue is at 2 levels -
1. Many people who do back testing on option writing just do it on expiry prices. So they never knew draw downs on gap ups and gap downs
2. Adding to point 1 - they don't know snapshot max drawdowns occurred on minute to minute basis during volatile moves.
I can say with confidence that most of the back testing's does not cover point 2. So the key is remains that - if the system, traders psyche, traders risk tolerance and appetite levels can hold the drawdown's.
Yes in between the position was in Red on certain days. Like all the trading systems this will have MAE and MFE situations and drawdowns.
So there is a way to backtest the position every 5 minutes and check how did it look in the past. Since the win % here is around 70% the trader has to adjust the risk appetite accordingly since the reward is defined. It depends on the traders mindset. IF psychologically this kind of trading fits their porfile.
Normally at the beginning it is better to avoid stock options because of the following reasons.
1. Not much liquidity
2. Stock specific news
3. Stocks can move wildly.
When or how many times do you see Index moving 5% or greater in a year.
In August I was doing Long Call Butterfly in Reliance one leg was ITM or Deep ITM. There was no liquidity at all. It had to scratch the trade. Imagine if reliance does not have liquidity then forget about other stocks.
1. Not much liquidity
2. Stock specific news
3. Stocks can move wildly.
When or how many times do you see Index moving 5% or greater in a year.
In August I was doing Long Call Butterfly in Reliance one leg was ITM or Deep ITM. There was no liquidity at all. It had to scratch the trade. Imagine if reliance does not have liquidity then forget about other stocks.
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